Redistribute Act IV Emissions

KIPs Draft
#1

KIP-2 Act IV Emissions Redistribution

Proposal

Redistribute Act IV emissions to prioritize Hiding Game.

Background

Now that the Hiding Vault has been established as an enhanced lending protocol, both in TVL and total amount borrowed, I am proposing that we shift ROOK rewards away from it and bolster the Hiding Game rewards.

I am proposing this because I feel the current emissions structure does not reflect key aspects of our current ecosystem:

  • As a MEV redistribution protocol, we should be focused on prioritizing opportunities that create MEV, where the Hiding Game vastly exceeds the Hiding Vault, as it is commonly assumed that around 95% of MEV is arbitrage, and 5% is liquidations.

  • Hiding Vaults already receive significant benefits from Compound (interest and COMP distribution) and JITU (liquidity buffer). The ROOK rewards should be some (light) icing on the cake.

  • Hiding Vault rewards are not currently motivating users to take positions that create MEV. Until we are able to dynamically distribute rewards to different assets in an effort to dissuade same token supply and borrowing, the Hiding Vault will not be utilized to its full potential.

  • Lastly, users really should only earn ROOK as a partial refund for their lost collateral on a liquidation, as was the original intention of the Hiding Vault reward system.

My proposal is to reduce Hiding Vault Emissions by 50%, and send add that ROOK to the per-epoch rewards for the Hiding Game.

For reference, here is the current emissions structure:

Name Percentage # ROOK this Act # ROOK per day
Hiding Vault 40 20790 231
Hiding Game 40 20790 231
Liquidity Pools 20 10395 115.5
Total 100 51975 577.5

Here is what the new structure would look like:

Name Percentage # ROOK this Act # ROOK per day
Hiding Vault 20 10395 115.5
Hiding Game 60 31185 346.5
Liquidity Pools 20 10395 115.5
Total 100 51975 577.5

I would project that this decision will not significantly impact the usage of the Hiding Vault, due to the benefits described above, but would drive more users and volume through the Hiding Game. We will look more appealing to potential partners, we will more fairly reward frequent users of the protocol, and we will also drive Treasury growth.

Assuming that this could go live right as the first half of Act IV’s emissions that were minted ran out (Ethereum Block Countdown), the final proposed ROOK rewards for Act IV’s second half would be:

Name Percentage # ROOK Remaining # ROOK per day
Hiding Vault 20 5197.5 115.5
Hiding Game 60 15592.5 346.5
Liquidity Pools 20 5197.5 115.5
Total 100 25987.5 577.5

Specification

On Sept. 28, 2021 starting after block 13318598, reduce remaining HV ROOK Rewards by 50% and increase HG rewards by 50%.

2 Likes
#2

I support the cut of Hiding Vault emissions. I believe we should send half of the cut emissions to the Hiding Game, and effectively burn (or just not mint) the rest.

This would in effect make the split 50 / 20 / 20 (with / 10 burnt).

2 Likes
#3

I support the redistribution proposal from KIP-2

1 Like
#4

I also support reducing the HV emissions. I’m fine with either 50% or 60% rewards going to HG. I’d prefer to not burn rook but set it aside for rewards in upcoming acts.

#5

I support this KIP.

If this decrease in HV rewards hampers product adoption there are other ways to facilitate this through more efficient use of ROOK (besides improving the product and adding more features, both which are being worked on). One example that I just thought of: Mint 100 Vaults and airdrop them to active HG users or tokenholders that don’t have a vault, to decrease the barrier of them starting to use the HV.

1 Like
#6

I’d be very supportive of this. To be honest, I’d be willing to make hiding vault rewards even lower for same reasons explained. We should to move to this ASAP as the HV is just causing selling pressure with little treasury benefit unlike the hiding game. Would be good to do this first and then talk about burning given this is a pretty simple change.

1 Like
#7

I’d like to meet in the middle between yours and azsom’s amendments and say we take the 10% lapras proposed to burn and pocket it for later usage (as determined by a follow up KIP)

So the new proposal would be:

Name Percentage # ROOK Remaining # ROOK per day
Hiding Vault 20 5197.5 115.5
Hiding Game 50 12993.75 288.75
Liquidity Pools 20 5197.5 115.5
Saved for future use 10 2598.75 NA
Total 100 25987.5 519.75
#8

After community consideration, this proposal has been replaced with Act IV Emissions Reduction